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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ... (More)

About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved downtown in 2006 and enjoy being able to walk to activities. I do not drive and being downtown where I work and close to the CalTrain station and downtown amenities makes my life more independent. I have worked all my life as an economist focusing on the California economy. My work centers around two main activities. The first is helping regional planning agencies such as ABAG understand their long-term growth outlook. I do this for several regional planning agencies in northern, southern and central coast California. My other main activity is studying workforce trends and policy implications both as a professional and as a volunteer member of the NOVA (Silicon Valley) and state workforce boards. The title of the blog is Invest or Die and that is what I believe is the imperative for our local area, region, state and nation. That includes investing in people, in infrastructure and in making our communities great places to live and work. I served on the recent Palo Alto Infrastructure Commission. I also believe that our local and state economy benefits from being a welcoming community, which mostly we are a leader in, for people of all religions, sexual preferences and places of birth. (Hide)

Improve Mobility to Address Inequality

Uploaded: Apr 4, 2014

Discussions about poverty and inequality are in the news these days. I have been asked about inequality especially in the Bay Area by several reporters recently. I tell them that I think the while it is true that income inequality is increasing; the problems we should be focusing on are wage stagnation and lack of upward mobility for many workers.

The wage gains for workers with high skills, such as many Bay Area tech workers, does not make other workers poor or prevent them from acquiring skills and moving up. Poverty and lack of upward career paths are real problems but they are not caused by the success of others nor would it help workers at McDonald's if tech workers made less money.

While graduating from a four-year college is not the best career pathway to good jobs for everyone, getting a good high school education and some additional training, for example, an apprenticeship or community college certificate program is increasingly necessary. High school dropout rates and the shortage of career technical training programs is not caused by the success of high wage workers and will not be improved if they earned less.

With one exception (the cost of housing) a strong economy such as the Bay Area tech led economy, provides more opportunity for upward mobility than an economy that is struggling even though the hot economy may have more income inequality. Unemployment rates in the Bay Area are below those in other parts of California. Wage levels are among the highest in the nation, which creates the spending to support job growth in service sector occupations. The same is true in North Dakota where the strong job and wage growth in the oil and gas sector is creating low unemployment, job and wage growth AND rising home prices and rents.

I am part of a larger team that has been working for the past year on developing strategies to help low and moderate wage workers move up. We have three major conclusions. One is what I argued for abovethat a strong economy is helpful and, as a result, policies to make the Bay Area more competitive such as good schools, better transportation infrastructure, more housing and consistent permitting and regulation, are part of an upward mobility agenda.

But the heavy lifting has to be done in education and training programs that prepare students and workers for good jobs and excite them about the connection between learning and good jobs. And in making sure that everyone who needs it has access to basic math, English and digital literacy and that they understand what employers expect from workers. And none of these efforts are improved by disparaging or attempting to change the success or pay of highly skilled workers.

Success may or may not reduce inequality much but it will certainly improve the opportunities and standard of living for many who are not stuck near the bottom of the wage ladder.

Our third conclusion, which I will discuss in a future blog, is that the number of relatively low wage jobs will increase and improving prospects for these workers (if that is a goal) will require improving wages and working conditions in these jobs as well as providing additional support such as through an expanded Earned Income Tax Credit.

Posted by curmudgeon,
a resident of Downtown North,
on Apr 4, 2014 at 2:36 pm

"But the heavy lifting has to be done in education and training programs that prepare students and workers for good jobs and excite them about the connection between learning and good jobs. And in making sure that everyone who needs it has access to basic math, English and digital literacy and that they understand what employers expect from workers."

I've been hearing that since Sputnik. And the very existence of Silicon Valley demonstrates that it's been happening.

Schools can only provide the framework that talented individuals will adapt to their own abilities. That adaptation does not happen passively; even the smartest must commit themselves to much hard work toward a deferred reward.

But not everyone has the innate talent to be part of the SV phenomenon, and no amount of attempts at "remedial" education will change that. Every economy needs service workers and skilled tradespeople. What is lacking is the social respect for these occupations that leads to respectful pay and living conditions. A wise society will correct that. Education has a huge role there.

Long ago I read an anonymous quotation: "A society that elevates shallow philosophers and deprecates plumbers is in deep trouble. Neither its ideas nor its pipes will hold water."

Since the Reagan administration this country has been systematically disparaging the vital occupations while elevating the unproductive drones on Wall Street; other nouns also fit. We cannot maintain that course. The change will have to occur among the 99%.

Posted by Louise68,
a resident of Menlo Park: other,
on Apr 4, 2014 at 5:14 pm

curmudgeon --
Thank you very much for that quote (about philosophers and plumbers). It is very important for people to realize that.

There are two "elephants in the bedroom" that are rarely discussed when talking about the economy: racism and sexism. Until these two issues go away, we will continue to deprive millions of people of job opportunities and better lives, and society will be deprived of the skills and talents of millions of people.

How many young people who do have incredible talents and abilities see those very talents and abilities trashed by the cruel realities of a racist society that routinely channels young black children and teens (especially males) from schools directly into our huge prison industry -- which is, disgustingly, run for profit. This must change.

Steve Levy --
You are wrong in thinking that the high salaries paid to Silicon Valley tehcies do not prevent other salaries from being set at higher levels -- at least within the same company. Every company has a finite amount of money, and if some workers are paid very high salaries, there will be much less money left to pay higher salaries to other workers, many of whom do not even earn a living wage.

I am sad, but not surprised, that a reporter sought out your advice -- someone who seems to be doing very well financially. What about the viewpoints of those who are not doping well at all in this economy? Aren't their viewpoints worth being publicized? (They are, after all, the great majority of people.)

One of the main components of our project was an extensive outreach campaign to low and moderate wage workers and community organizations that work with them. We had 21 meetings scattered throughout the region and dozens of interviews with workers and professionals whose daily lives are about helping people out of poverty.

We explicitly asked workers what they saw as the barriers to advancement. They mentioned

lack of education and skills
Poor English language
Difficulties with transportation
It is expensive to take time off for training and it is often costly and offered at inconvenient times
Fear of deportation
Housing near jobs is expensive
Difficulty in finding and applying for jobs

There were a couple of comments about racial discrimination and I do not remember any comments about sexism.

Perhaps you were thinking of high level positions in the tech world although you are probably exaggerating there. But we were looking at pathways to middle wage jobs--in construction, health care, sales, manufacturing, police and firefighters, EMTs, skilled repair technicians--not the top level at Google.

You are just wrong that there is a finite amount of money that companies have and high wages for some take away form others. The high skilled workers, for example, at Google or Apple or LinkedIn or Twitter allow the company to make profits and allow higher wages and benefits for lower skilled positions.

It is true that times are difficult for some families and this is especially true for African American and Latino families as has been true for decades.

While a rising tide does not lift all boats, a rising tide helps. Unemployment rates and poverty rates up and down the peninsula are well below the national average. The high wages and profits in the tech sector support city and school revenues--they are a large part of why the Governor could add substantial funds to K-12 education an dedicate some of the extra funds to districts with a large number of at risk students.

I agree that our system fails some students and families but I think the high school drop out rate, the lack of English, math and digital literacy skills, the poor functioning of our public transportation system and the high cost and inconvenience of training are not primarily the result of racism and sexism.

Posted by Louise68,
a resident of Menlo Park: other,
on Apr 5, 2014 at 12:27 am

Steve Levy --
thank you very much for your kind and thoughtful reply. I really appreciate that.

I also thank you and the others who are trying to help people out of poverty asking them about what those very people were aware of as barriers to getting better-paid jobs. Their list was quite realistic. And transportation and lack of ability to communicate effectively in English are two big obstacles to getting and keeping decent-paying jobs here, but the biggest, as I see it, is the ridiculously high cost of housing here on the Peninsula.

Yet what is always built now here on the Peninsula? More and more and unnecessary office buildings -- not more affordable housing.

Transportation is very difficult, expensive, and time-consuming, no matter which mode you use to get around. This is especially true if you have to drive to and from work. The only good thing about driving to and from work is that it allows you the flexibility to leave early if you absolutely must or to stay late, if you need to work late. Other than that, driving is a terrible burden. We need much, much more really good public transit that is cheap to use, frequent, reliable, and safe.

I am also surprised that childcare was not identified as a problem that hinders advancement or getting a better-paying job. And I am surprised, too, that sick leave policies that do not allow flexibility to care for a sick child (or aged parent, for that matter) can get a person fired -- which would greatly hinder many parents in getting another job, and would certainly hinder a parent from getting a decent-paying job.

Yes, a rising tide does lift many boats, and IF the economy is really getting better (which I very much do not believe it is), this will, indeed, help everyone.

Because service-sector jobs never pay a living wage, it is absolutely wonderful -- and essential -- that at least some people who have the ability to do something to help poor people get jobs that pay a living wage, with something left over for recreation, are actually trying to help people get those decent-paying jobs. We will all be much better off when more people are lifted out of poverty.

However, if it is true here (the Peninsula) that there are at least 3 applicants for every job, the problems caused by poverty are never going to go away.

What also needs to be done is for these "movers and shakers" who you said were trying to help lift people out of poverty to push hard to bring all jobs outsourced to foreign countries home to this country. Too costly, you say? Well -- what is the cost to society in ruined lives and the crime and other problems that are caused by poverty?

And who says that some of those poor people would not eventually do very well in those high-paying techie jobs, after they get proper training? Women, as well as men, must be allowed to do these jobs --if they really want to.

Please keep doing what you can to help people get decent-paying jobs. That will help all of us. (And please don't forget teaching K-12 as a decent-paying job, although I am convinced that all teachers should be paid a lot more than they are now paid. But that is a subject for another discussion -- not this one.)

Thanks, again, Steve Levy, for your interesting blog and kind reply. Please keep up the good work you are doing.

Posted by Joe,
a resident of Another Palo Alto neighborhood,
on Apr 5, 2014 at 9:31 am

How much has the Federal Government spent on it's War on Poverty by now? Some estimates are as much as $16T has been transferred from working people to non-working people. And what has that vast fortune achieved? The poverty rate (according to the Federal Government) has dropped to 15%, for the putative 19% that existed in Johnson's day.

Posted by Garrett83,
a resident of another community,
on Apr 5, 2014 at 1:04 pmGarrett83 is a registered user.

I agree with Steve Levy.

Silicon Valley is truly amazing story from the.early days to present which I very much like it to continue into the future.

I am low income, pretty much chose not to be tech, but it was my choice. Did a different route which lead me to other things.

But folks every city I have lived needed people who.serviced the needs of the community which I will not list. No tech related jobs because if a downturn happens and then another upturn in tech. That same list I won't mention will still have jobs that someone will need.

This is a blog about mobility as a solution to concerns about poverty and inequality and the findings of our recent project work. If you have comments on the points I raised, feel free to continue commenting.

If you want to discuss the history of the federal attempts to reduce poverty and like to put down people struggling to improve their situation, please start your own blog.

Posted by nac,
a resident of Old Palo Alto,
on Apr 6, 2014 at 12:41 pm

Steven,

A thought.

The technical workers moving up, getting paid more, of course does not directly contribute to lack of movement in the labour force for the less well paid jobs in McDonalds et al. However we have to consider the nature of what these highly skilled technology workers, many of them in software, around here are producing. Many of them are using their skills to produce complex information systems that allow businesses to make more money with less people: Consider automated check-in/out machines at car rental businesses and airports and hotels; consider online services that let you search for better prices without contacting or calling stores; consider web applications for managing insurance, billing, other such things yourself instead of talking to someone; consider information applications that allow data tracking, analysis and management without someone looking over paper --- aka "machine learning"; Consider better targeting of advertisements via big data and online advertising, buying things online without going to a shop; etc.

All of these inventions are indirectly taking away jobs that would have existed before: Front desk staff, people to answer phones, people studying and analysing data, shopkeepers, etc. As we produce more technology, in the high-value countries like the US (that aren't manufacturing gizmos) we need less and less people to do things in daily life, as a result the 'chasm' needed to be crossed to move up the ladder for the lower level workers is getting wider and wider.

I think this is pretty much inevitable, but there's definitely a link there, since each higher-value software position potentially results in the removal of more than one low paying job.

Posted by Roger Ailes,
a resident of another community,
on Apr 6, 2014 at 10:06 pm

Thanks for the restoration and the caution, Steve

I'd like to satire Mitt Romney's putdown of the "dependent" 47%, but I'm allowed only one username per forum.

Romney's spiel illustrates the cynical political exploitation of poverty and its persistent victims (dogwhistle: them Negroes and Mexicans) that have constrained and will constrain upward mobility opportunities in the USA for a very long time.

I see similar trends in European countries experiencing large influxes of dark-skinned immigrants. Their cynical elites have learned the lessons of the US: you can keep the white underclass .down by exploiting their fear and loathing of the dark-skinned peoples among them.

Posted by stephen levy,
a resident of University South,
on Apr 7, 2014 at 10:19 amstephen levy is a registered user.

Thanks to nac, Garrett and "Roger Ailes" for their recent posts.

Nac and Garrett are both correct.

NAC is correct that technology has allowed substantial and ongoing shifts in where jobs are found. The most familiar examples are the shifts created by Internet and mobile opportunities to shop online, do banking online and arrange travel online.

In the financial sector this has led to decreases in banking jobs. In retail it has led to declines in stores offset by some increases in Internet operations and the accompanying warehouse and distribution jobs. In the travel industry, reservation jobs have declined but air travel and tourism are up.

Garrett is correct also. Shifts in technology and jobs do not lead to a decline in overall employment but to shifts, which are taking place all the time.

One connecting factor is that technology reduces costs for consumers and allows them to spend more elsewhere. This is true for online shopping, for the competition that the Internet and mobile apps bring to hotel shopping or the new car share opportunities as well the time savings.

As to whether these shifts favor low, middle or high wage jobs the evidence is mixed. The largest losses in middle wage jobs recently has been in construction and manufacturing--not areas discussed above.

The shift from retail store jobs to online shopping is not a shift to lower wage jobs. Tourism and food service jobs are growing.

Middle wage opportunities are growing in health care and are the rise again in construction. The repair sector is an example of middle wage job growth allowed by increases in income for consumers.

But both posts underscore that these changes are likely to continue and that workers need to plan for continuing changes in where jobs are growing (retirements spread job openings more broadly) and the need for constant skill upgrading.

The rapid change in technology makes a mobility agenda that much more important as it makes the agenda harder to pull off.

Posted by stephen levy,
a resident of University South,
on Apr 7, 2014 at 10:38 amstephen levy is a registered user.

Roger Ailes is correct that politics has played a role in limiting funding for the investment programs (I am not talking cash support here) that could improve mobility--from education to workforce to transportation.

Our research also shows that active industry partners--developing curricula that lead to jobs, offering internships, exciting students about the connections between learning and jobs--are a very critical component of success in preparing students and workers for better jobs.

"Income inequality" is a mis-leading term. "Income gap" may be more appropriate.

To me, income inequality implies that a defined class of people is not receiving the same pay for doing the same job as others. The most common inference would male vs. female salaries for the same job function --- often within the same company.

"Income gap" is much more accurate --- for example, there is a huge income gap between a retail clerk\\\'s salary and the CEO\\\'s salary for the same retail chain. Inequality? Two jobs, very different responsibilities and requirements. Is the CEO job overpaid for his/her contribution to the company\\\'s revenues and profits (compared to what the retail clerk contributes), that is the question --- but inequality is not a very good descriptor.

And we have to admit that "inequality", as inaccurate as it is, does provide a much more emotional reaction. Inequality implies discrimination, among many other not-so-kind human attributes.

Posted by Garrett,
a resident of another community,
on Apr 8, 2014 at 8:49 pm

You will always have a income gap when it comes to certain professions. Not everyone is going to have a high paying job or land a job in tech. Certain professional fields of gluts of educated people wanting to work.

I remember bubbles busting leaving many people unemployed and having to find new work if it means leaving their chosen field. Remember it also meant lower pay.

Posted by CrescentParkAnon.,
a resident of Crescent Park,
on Apr 9, 2014 at 11:24 am

>>I tell them that I think the while it is true that income inequality is increasing; the problems we should be focusing on are wage stagnation and lack of upward mobility for many workers.

One leads to the other as more people are unnecessary and the people left who do their job and get (sort of falsely) credited for more productivity do not get paid commensurately more. The whole economy starts to choke.

Raising minimum wage really will help a little bit for a while, but when you raise minimum wage eventually prices follow, and if the verticalization of compensation, access, risk, etc continues things just get worse while time runs out on millions of people's lives.

The problem is the "geometry" of the economy. It just does not need people they way it is going, and what it needs people for is service industry things that are often not what people like to do, serving other people ... it's just another name for slavery, and it can get very bad the farther down the ladder you do. There are so many people that a demand-supply paradigm does not work ... that is, if you consider human rights and spiritual aspects of life, which is why the US is becoming a really nasty place, led by the Republicans, who use economics as an excuse for genocide and war as natural occurrences.

The secret about schools is they do not really teach much of anyone anything. Did Bill Gates learn what he learned in school ... did Steve Jobs ... not at all, they had mentors and access to an inner sanctum of our tech economy ... something that by its very nature is supremely limited, and now more than ever by class and economic status.

It just takes too many resources to bring the majority of people up to snuff to where they are valuable as labor, and if they are not valuable for their work, they will not be valued for their political participate, of their children either.

The real problems we have to overcome is the delusions that we take as reality, the lies we throw out like minimum wage, the recession, things after 100,000 years of human evolution finally are reaching the terminal state in terms of many trends. I don't know if this is going to lead to catastrophe or disaster/extinction of not, but it's not out of the question, but the thing that will turn it around people treating other people like people, not any artificial interpretaion of realty for some group's benefit, or a more totalitarian society, that never helped anyone.

I think some out of band ideas are in order. There ought to be a maximum wage, that would flatten the economy so that so much effort is not put into areas that are not productive, because we need to triage just about everything nations, states and corporations do right now. This should be implemented by the same tax policies we used to have that worked to support democracy way back when, and with the tax revenue we could afford to experiment with bringing American workers, and other up to speed and leverage the exponential human power to tip things there other way instead of being the victim of all the negative exponential trends.

All the bad trends I spoke of are on increasing exponentially, and when we get to the knee of that curve we'll know it and it will be too late then. Then lots of bad stuff could happen and the people who will claim they had no idea or there was nothing else to do, are the one that will be to blame.

People like CPA are zero-summers: If someone goes up, someone else must go down. This is just stale Marxist pap. Considering the hundreds of millions of people murdered in the pursuit of the zero-sum dream, one would think that such ideas could be judged at The Hague as war crimes.

Posted by stephen levy,
a resident of University South,
on Apr 9, 2014 at 8:42 pmstephen levy is a registered user.

The economy is not a zero sum game where when someone wins (improves their skills and pay) someone else must "lose".

People and firms that create new goods and services that save customers money and time or add value to their lives in other ways that increase the pie. Higher productivity growth, whether through improving skills or adding capital, increases the economic pie.

If we look around our own region, I see no evidence or logic that suggests that restricting the incomes of high earners will help anyone. We can have a separate discussion about taxation if you wish but I do not see the logic of how lower pay for engineers or for Serena Williams helps workers in the food or hotel industry.

There are probably some people who will always be able to earn only near the minimum wage for a variety of skill and other reasons.

But many people are "on the bubble" and could be helped by policies that excite them to stay in high school, or provide easy ways to learn English or basic math or foster the development of more training programs designed by industry to lead to good jobs.

There are no silver billets in the skill building world and a lot will always depend on individual initiative but we CAN do better and it is worth the effort whether out of good will or wanting to improve the nation's competitive position. Improving our high school graduation rate and transitions to jobs will do both.

And, yes, I think improving mobility for as many as we can WILL reduce inequality as compared to doing nothing and is a far better approach than getting mad at high earners.

If the supply of low cost labor (through illegal immigration) is allowed, then there will be no increase in wages at the lower end. It is like Ricardo's iron law of wages. Control the border, then wages will rise and there will be innovation in mechanization in the fields, as well as improved efficiencies in the service sectors.

Posted by Garrett83,
a resident of another community,
on Apr 11, 2014 at 10:48 amGarrett83 is a registered user.

Vineyard owners prefer harvesting by hand. Restaurants have entire staffs that serve diners. Cars, trucks and planes need servicing by peopls. Doctors, Nurses and Vets are required and no machine can handle this type of job.

Types of jobs change but sometimes you read about the odd Blacksmith or creative type who can seek out training for a chosen profession in furnitur making.

Posted by CrescentParkAnon.,
a resident of Crescent Park,
on Apr 11, 2014 at 11:07 am

Deleted

SL: CPA, Your original post is still up. No point posting it again. It was not deleted. You have the right to post a blog yourself if you are dissatisfied with anyone's editing. The editor's have asked each blogger in this section to edit their own blogs.

Apparently you and I have different ideas of what it means to post respectfully as the TS editors ask for any poster.

"The problem is the "geometry" of the economy. It just does not need people they way it is going, and what it needs people for is service industry things that are often not what people like to do, serving other people ... it's just another name for slavery"

I heard the same arguments back in the 60's, where "give according to ability; take according to need" was actually accepted by too many Marxist sheep.

The aggregate economy is the result of supply and demand in the marketplace. If that marketplace is free and open-ended, then it will be impossible to constrain its ability to satisfy human needs (and wants), no matter how high the prevailing wage is. If one want a high wage, at the lower end, as I do, then the border needs to be secured. Don't let "equality" get in the way of a high wage society.

Posted by CrescentParkAnon.,
a resident of Crescent Park,
on Apr 11, 2014 at 11:40 am

> I heard the same arguments back in the 60's, where "give according to ability; take according to need" was actually accepted by too many Marxist sheep.

Kevin, when you constantly label anything that you might disagree with as communist and do not even bother to discuss or quality your comment, there is no discussion happening.

That does not seem respectful ... I wonder if you will get deleted?

Steve, I'm cool with your editing, I'm not when you shut other people up because you cannot take what they have to say. There was nothing I said that could be construed as a put-down that was not true or could be put any gentler.

We have a disagreement about what it means to be respectful and what a put down is.

As far as "mad at high earners" that was not directed at you. In my world there are many who argue that high earners are being paid unfairly or that their earnings are hurting lower income residents.

with regard to housing prices and rents around here, there is a connection between increasing incomes for highly skilled people and rents and home prices. On balance i do not think lowering earnings for tech workers, to take an example, is good policy.

I would say that some of the people protesting the Google buses and high earners in SF pushing up rents were "mad" at them.

Posted by CrescentParkAnon.,
a resident of Crescent Park,
on Apr 11, 2014 at 1:46 pm

> In my world there are many who argue that high earners are being paid unfairly or that their earnings are hurting lower income residents.

There is a reason comments that disagree with you may have what you perceive as a disrespectful tone, although they may not be disrespectful.

Your comment above says - "there are those who argue". An argument is a collection of facts and interpretations. You broached that subject as the emotional tone of "people are mad".

There are any number of ways that can be parsed for meaning, most of them point the "blame" is there is blame at you, since you are the one to translate what you call arguments into the emotional realm to dismiss them. It is in fact you being mad at them, for not being able to respond cooly and calmly to their facts without seeing your own dismissiveness and failure to meet them on their terms ... so you just frame them as emotional, and then disrespectful.

Having one's point of view proactively brought up and dismissed while accusing them of being hot emotionally is a very unproductive way to start any conversation, but a good way to write polemics that are dismissive of the other point of view without really having to deal with that point of view, and a built in way to censor those comments. That is what I perceive your process is in nearly every blog you write. Then when people respond in the space you have cubby holed them in, you delete their posts as being disrespectful.

> On balance i do not think lowering earnings for tech workers, to take an example, is good policy.

Here is another comment I wonder if you could explain? Who wants to lower earnings for tech workers? Where is that argument being made?

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